9. Taxpayers whose income is low can find that some forms of tax planning can result in higher than expected taxation. Many retirees will make distributions from IRAs or qualified retirement plans prior to age 70½ to have a low tax rate applied. Roth conversions are often done for the same reason. A relatively small amount of taxable income can cause up to 85% of Social Security payments to become taxable.

10. New this year, an increase in taxable income as just described can also cause a reduction or elimination of subsidies available to lower income households under the new health insurance law. Social Security payments, even the tax-exempt portions, are included in this evaluation. SSI is excluded.

11. With today’s mobile workforce, it is not unusual to find some taxpayers that worked at a job and earned a pension benefit but was not subject to withholding for Social Security and another job that was subject to Social Security taxes. Many such folks are unpleasantly surprised that their Social Security benefits may be reduced due to the Windfall Elimination Provision.

12. If your client “files and suspends,” Medicare premiums can not be paid automatically from Social Security and must be paid directly to the Center for Medicare & Medicaid Services (CMS). Be sure your client is getting billed properly by CMS. If it is not paid timely, your client can lose their Medicare Part B coverage.